FTC shuts down supplement marketers over phony free trial schemes
A federal district court agreed to the FTC’s request to halt the deceptive schemes, which were carried forward by a group based in San Diego. According to FTC’s complaint, the deceptively advertising free trial offers and not only charging consumers full-price for the trial product, but also enrolling them in expensive, ongoing continuity plans without their knowledge or consent. The court order announced last week temporarily halts the operation, freezes its assets, and appoints a temporary receiver over the business.
According to the complaint, the defendants market and sell a variety of products online, including skin creams, electronic cigarettes, and dietary supplements. Advertising through third-party websites, blog posts, and surveys, the defendants allegedly offer consumers “RISK FREE” trials of products such as “Wrinkle Rewind,” “Erase Repair H/A,” “Pro Vapor,” “Cerebral X,” “Test X Core,” and “Garcinia Clean XT.”
Getting stuck in continuity billing schemes
Consumers who click on these ads are taken to the defendants’ websites, which, the complaint alleges, claim to offer trials of these products for just the cost of shipping, which is typically $4.95 or less. But according to the complaint, consumers wound up being charged as much as $98.71 for the trial shipment.
They were also enrolled without their consent in a negative-option continuity plan under which they receive an additional shipment each month and are charged full price for each shipment. These type of billing schemes continue until the consumer cancels the account.
The FTC complaint also alleges that the defendants used deceptive order confirmation pages to trick consumers into ordering other products, for which they were also enrolled in the continuity plans. FTC alleges that the defendants made it difficult for consumers to unsubscribe to these plans.
According to the complaint, the defendants brought in “tens of millions of dollars” through the deceptive schemes. The defendants were named as Triangle Media Corporation, Jasper Rain Marketing LLC, Hardwire Interactive Inc., and Brian Phillips, who the FTC alleges owns and operates Triangle Media Corporation.
The complaint seeks a permanent injunction against the defendants, the payment of restitution to consumers and disgorgement of ill gotten gains.
Despite black eyes, online sales continue to grow
Deceptive practices in the online sales of supplements might be a minor black eye for the industry but are unlikely to halt the tide of phenomenon. The share of online sales within the industry continues to grow, and marketers continue to find synergies between the digital world and brick and mortar operations.
The big news has been Amazon’s acquisition of Whole Foods Markets, giving the online giant a big footprint on the ground. At the same time, the big brick and mortar names in the industry—GNC and Vitamin Shoppe—continue to expand their online presence as a way to prop up revenues in a challenging environment. Both chains are dealing with overextended store networks that has seen them struggle with closing stores in uncompetitive locations while at the same time revamping outlets whose presentation has grown tired.
